Reflections on White Collar Crime and Federal Criminal Law

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Month: April 2016

Yesterday the U.S. Supreme Court heard the appeal of former Virginia Governor Bob McDonnell. As regular Sidebars readers know, I’ve followed the case closely, and I was at the Court to hear the arguments. Although it’s always risky to predict results based on the questions from the Justices, it appears that McDonnell and his attorneys have reason to feel pretty optimistic.

One reason they have for optimism is the fact that the Court agreed to hear the case at all; there was no obvious reason to do so. There was no circuit split in the lower courts that the Justices needed to resolve. A three-judge panel of the Fourth Circuit Court of Appeals unanimously upheld McDonnell’s convictions, and all the judges of that court had unanimously declined to rehear the case.

But the Supreme Court not only took the case, it took the unusual step of allowing McDonnell to remain free on bond while the case was pending. And during oral argument yesterday it became clear the Court has some deep reservations about the potential breadth of federal bribery laws.

McDonnell and his attorneys outside the Supreme Court after the arguments

The Supreme Court Arguments

McDonnell and his wife Maureen were convicted in September 2014 of multiple counts of federal corruption. Over a two-year period they received a series of extravagant gifts and loans worth more than $175,000 from businessman Jonnie Williams. The government charged that, in exchange, the McDonnells agreed to promote Williams’ dietary supplement, Anatabloc, within the Virginia government. (For more detail about the case and my analysis of the charges, you can read some of my earlier posts here and here.)

At the Supreme Court Noel Francisco, arguing for McDonnell, focused on what has been the defense’s primary theme throughout the case: whatever McDonnell may have done for Williams, it did not amount to “official action” for purposes of federal bribery law. He said the government proved only that McDonnell did things such as introduce Williams to other state officials or urge others within the government to meet with Williams to discuss possible research studies. Such steps, he argued, cannot constitute official action unless there is evidence that the governor also tried to influence the outcome of any subsequent meeting.

The distinction, Francisco urged, is between actually making or influencing a government decision and simply providing access to those who might do so. McDonnell, he argued, did only the latter. He said the government’s theory made it possible for politicians to be prosecuted for extending simple political courtesies to a supporter, even if they never tried to exercise actual government power or influence any government decision on that supporter’s behalf.

Some potential cracks did appear in Francisco’s argument during questioning from the Court. Chief Justice Roberts asked about a government employee who worked as a scheduler, whose job it was to arrange meetings with the governor. For that individual, he said, arranging a meeting, “I suppose, would be an official act.” Francisco initially agreed that was possible.

That quickly got him in trouble, however, because it seemed inconsistent with the governor’s claim that simply arranging a meeting can never, by definition, be a official action. Justice Kagan immediately started to probe this point with some follow-up questions, and Francisco quickly backed away from his initial concession. He said although other laws might prohibit the scheduler from taking payments for arranging meetings, it would not violate the bribery laws.

This was actually one of Francisco’s stronger points, which he made several times. Federal bribery law, he argued, is not meant to be a comprehensive ethical code that covers all misconduct. Even if bribery is interpreted more narrowly, as McDonnell urges, that would not necessarily immunize all kinds of misbehavior. There are other laws on the books, as well as personnel regulations and other potential sanctions, that may apply. But bribery law itself, he urged, needs to be more narrowly construed in order to avoid potentially criminalizing a great deal of routine political behavior.

The really tough questioning was reserved for Deputy Solicitor General Michael Dreeben, arguing for the government. Dreeben began by trying to focus the Court on the implications of McDonnell’s position. Arranging access or setting up a meeting can absolutely be official action, he argued. Otherwise a governor could set up a “pay to play” system through which he routinely demanded that people pay him in exchange for his agreement to arrange a meeting with other state officials: if you don’t pay, you don’t get the meeting. That seems to be the essence of what the bribery laws prohibit.

Dreeben argued that the implications of a ruling for McDonnell would be staggering. The Court would be saying it is acceptable for officials to sell access to government actors to the highest bidder. He argued that official action encompasses anything ordinarily done in the course of a public official’s duties, including arranging meetings and access. There is no legal basis for the carve-out that McDonnell is seeking for actions that didn’t actually influence the exercise of some government power. To hold otherwise, he argued, would be to create a “recipe for corruption.”

But for the most part, the Court didn’t seem to be buying it. The Justices, of course, have to think not only about the case before them but also about the implications for future cases of any opinion that they write. And several seemed troubled by the implications of the government’s argument that even something as routine as arranging a meeting or writing a letter could potentially support a bribery prosecution.

Justice Breyer in particular seemed very concerned about finding a limiting principle to further define federal bribery. He argued that if the legal standards are too broad it implicates the separation of powers by giving the executive branch, in the form of prosecutors, too much power to dictate the actions of legislative branch officials. He pressed both sides to help the Court find the words to craft the appropriate legal standard.

A great deal of time was spent on hypotheticals. Justice Breyer wondered whether it would be a felony if a constituent took a politician to lunch and bought an expensive bottle of wine, and after lunch the politician wrote a letter to a government agency urging it to act on a matter of interest to that constituent. Chief Justice Roberts imagined a case where a businessman takes a governor for an afternoon of trout fishing, and they discuss whether the business could get tax credits within the state. Is that a felony, he asked? Justice Kennedy asked whether it was a felony for the President to provide access to high-dollar donors.

Dreeben responded by arguing that “official action” is only one aspect of the crime and that the question of official action does not have to carry all of the weight in a bribery case. The prosecution would still have to prove a corrupt quid pro quo, a direct agreement to take the official action in exchange for the particular thing of value. In effect, he said, you have to look at the whole picture, not just the official action side of the equation: “you need to run this through all the elements of the offense.”

Looking at the whole picture, Dreeben also noted, shows why a case involving campaign contributions or routine political support would be very different from the McDonnell case. The Court’s prior decisions make clear that it is not enough simply to show a politician took actions that were desired by someone who contributed to her campaign. Given the nature of the quid, a much stronger direct quid pro quo would need to be shown. But the McDonnell case does not involve campaign contributions, and so those concerns are not implicated.

Corruption, Dreeben concluded, has to include a situation such as this, where a governor calls his Secretary of Health and says “take a meeting with my benefactor.” That means the person who paid the governor “will have the preferential opportunity that other citizens who do not pay will not have” to make their case before the Secretary. That kind of pay to play access is the essence of corruption and should be prohibited. The purpose of bribery law is to ensure that government officials act equally for the benefit of all, and not secretly to benefit those who are paying them off.

White Collar Crime and Prosecutorial Discretion: The Inherent Tension

As I noted, it’s always risky to try to predict outcomes based on the Court’s questioning. But Deputy Solicitor General Dreeben didn’t seem to be getting a lot of love from the bench. Only Justices Sotomayor and Ginsburg seemed to be potentially in his camp. To varying degrees, all of the other Justices who asked questions seemed quite skeptical of the government’s position.

McDonnell’s case may be the latest example of the Supreme Court’s increasing discomfort with a common feature of white collar crime: broadly written laws that then rely on prosecutorial discretion to determine which cases to bring. White collar statutes tend to use expansive language in order to avoid creating loopholes or safe harbors for criminal activity. But as a result, it is often relatively easy to come up with a parade of horribles about hypothetical cases that might fall within the statute.

For example, six years ago in Skilling v. United States the Supreme Court ruled that the crime of honest services fraud should be narrowed to apply to only bribery and kickback cases. I remember during the Skilling arguments Justice Breyer (also the most vocal questioner in the McDonnell argument) expressing incredulity that an employee who called in sick to go to the ballgame could potentially be found guilty of honest services fraud. By limiting honest services fraud to bribes and kickbacks, Skilling excused the truant employee example.

But in fact Skilling did not solve Justice Breyer’s problem. An employee who uses the phone to call in sick to go to the ball game technically commits plain old federal wire fraud – there is no need to rely on honest services fraud. The employee is using the interstate wires to further a scheme to defraud his employer out of his salary. We don’t see such trivial cases clogging the federal courts because thankfully prosecutors exercise their discretion not to bring them – but legally, all of the elements of the offense are met.

Similarly, every witness interviewed by the FBI who lies about a material fact, no matter how trivial, meets the elements of the federal false statements statute. But only a relative handful of such cases end up being prosecuted, most often when there is other criminal conduct involved. If prosecutors actually brought charges every time someone lies to the FBI, they would have time to do little else.

It is similarly easy, as the Court demonstrated during the McDonnell arguments, to come up with hypothetical trivial cases that would violate the bribery laws. If I make an explicit deal with my Senator that if I buy him lunch he will write a letter to another federal agency on my behalf, then technically, yes, that meets the elements of the bribery statute. You don’t see such cases being brought because a) they probably almost never happen; and b) prosecutors recognize they are trivial and prosecuting would not be an appropriate exercise of their discretion.

Again, this breadth is a characteristic of many white collar criminal statutes. And although this did not come up explicitly during the McDonnell arguments, the government’s response to the hypothetical trivial cases effectively has to be, “Yes, that technically violates the statute, but we’d never bring such a case. Trust us.” That’s not a very satisfying answer to many on the Court these days.

This concern about the breadth of many statutes is also a component of the growing concerns these days about over-criminalization. Many are troubled by the fact that so much trivial conduct is potentially covered by federal criminal laws – even though the trivial cases usually do not end up being prosecuted.

But this system, of course, depends on prosecutors doing a good job of exercising their discretion. The Justices may feel an increasing need to limit the scope of some federal criminal statutes in light of their concerns about prosecutors’ charging practices in recent cases. For example, last year in Yates v. United States, prosecutors’ decision to charge a fishing captain with the twenty-year felony for throwing undersized fish overboard arguably led the Court to adopt an artificially narrow reading of a federal obstruction of justice statute. The year before that, in Bond v. United States, the Court expressed great concern over the government’s decision to use a statute prohibiting the use of chemical weapons to charge a jilted wife who sprinkled some caustic chemicals on a doorknob to try to harm her husband’s lover, resulting in only a minor skin irritation.

The Court may conclude that drawing some more limited statutory parameters is particularly appropriate when it comes to public corruption. As Justice Breyer emphasized, there are special separation of powers concerns at work in such cases. The fear is that if corruption laws are too sweeping, unscrupulous prosecutors might use them to take down political opponents.

The alternative to a system of broad statutes coupled with reliance on prosecutorial discretion is one of narrower laws that necessarily leave some loopholes and are easier to circumvent. During the McDonnell arguments, Justice Breyer, for one, seemed perfectly prepared to accept that. He noted that whatever standard the Court announces for “official action” will not be perfect and “will leave some dishonest conduct unprosecuted.” But that may be necessary, he argued, in order to avoid the separation of powers problems that result from the alternative of giving the prosecutor too much power to decide which conduct to punish.

Congress historically has chosen to draft deliberately broad corruption statutes to avoid making the laws easier to evade. As Dreeben noted, for decades those corruption laws have functioned reasonably well. Although no system is perfect, prosecutions involving routine political courtesies and campaign contributions are rare to non-existent – and McDonnell certainly is not such a case. The hypotheticals imagined by the Court are just that. They do not reflect the real world of federal corruption prosecutions, any more than imagined stories of Nationals fans indicted for calling in sick describe the real world of wire fraud.

The question now is whether the Court will nevertheless feel compelled once again to restrict the scope of federal criminal law, even if that means effectively creating a safe harbor for certain kinds of corruption. The impact on both pending and future prosecutions of public corruption could be dramatic.

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Former Speaker of the House Dennis Hastert was sentenced today to fifteen months in prison, following a hearing in which the federal judge called Hastert a “serial child molester.” He was also ordered to pay a $250,000 fine and to undergo sex-offender treatments.

Hastert pleaded guilty last October to one count of illegally structuring his bank transactions in order to avoid questions about his large cash withdrawals. Hastert was withdrawing tens of thousands of dollars at a time to pay “hush money” to a man Hastert sexually abused decades ago when Hastert was a high school wrestling coach and the victim was a teenager. Evidence at the hearing revealed several additional instances of Hastert’s sexual abuse of teenage boys while he was a coach.

Hastert had lied to investigators when he was first approached about his large cash transactions, telling them he was being extorted. Investigators soon determined that was not the case and that Hastert had been voluntarily paying the man in order to keep him from going public with the abuse allegations.

Hastert’s attorneys had asked that the 74-year-old be spared from prison based on his poor health – he appeared in court in a wheelchair – and on the fact that he had already been disgraced. But the judge concluded that the seriousness of the sexual abuse, coupled with Hastert’s initial lies to federal investigators, justified a serious punishment. (The maximum sentence for the structuring charge was five years.)

You can read my earlier post about the details of the Hastert prosecution here.

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Many criminal investigations of corporations are resolved by a Deferred Prosecution Agreement (DPA) or its less frequently used cousin, a Non-Prosecution Agreement (NPA). These are essentially negotiated settlements between the Department of Justice and the defendant, in which the company agrees to certain sanctions and changes in behavior in exchange for avoiding criminal penalties.

Typically the terms and conditions of such agreements are set by the prosecutors. Decisions about whether to charge at all, what charges to bring, and the terms of any resolution are at the core of prosecutorial discretion. But in 2015, in an unprecedented decision, U.S. District Judge Richard J. Leon rejected a DPA between prosecutors and a company called Fokker Services because he thought the company had gotten too sweet a deal. The U.S. Court of Appeals for the District of Columbia Circuit recently reversed that decision, chiding the judge for overstepping his bounds.

As I wrote in this earlier post, I have concerns about the increased use of DPAs and the resulting effect on the criminal justice system. But regardless of how one feels about the merits of DPAs, the D.C. Circuit’s decision is a welcome reaffirmation of the importance of separation of powers and the proper role of the judiciary.

DPAs, NPAs, and Corporate Crime

The use of DPAs has been on the rise over the past decade ever since the Arthur Andersen debacle. The huge accounting company was driven out of business – and tens of thousands of people lost their jobs – as a result of a criminal prosecution that was later thrown out by the Supreme Court. To avoid such a potential “corporate death penalty,” companies have a tremendous incentive to enter into a DPA and avoid a criminal conviction.

In a DPA, the government files criminal charges but agrees to put the prosecution of those charges on hold. Under the agreement, the company generally admits to the charges and may agree to pay fines or restitution, undergo internal reforms, cooperate in the prosecution of individual employees, and take other remedial steps to atone for its misbehavior. In many DPAs the government requires the company to hire a monitor, at the company’s expense, to oversee its compliance with the agreement. The government agrees that when the DPA ends, usually in a few years, it will dismiss the criminal charges if the company has fully complied.

A NPA may contain the same kinds of terms as a DPA. The biggest difference is that in a NPA there are no charges filed with the court – it’s just a private agreement between the company and the prosecution. A NPA thus lacks the imprimatur of a court proceeding and the gravity of charges actually being filed. And because there is no public court filing, a NPA could potentially take place without the public even knowing about it.

United States v. Fokker Services B.V.

Fokker Services is a Dutch aerospace services company. In 2010 Fokker self-reported to the government that it may have violated federal export control laws in its dealings with Burma, Sudan and Iran. Over the next four years, Fokker cooperated with the government in a wide-ranging investigation of this misconduct. The investigation uncovered more than 1,000 illegal transactions, from which Fokker earned about $21 million.

As part of its cooperation, Fokker instituted a number of internal reforms. It also fired its president and demoted or reassigned a number of other employees involved. The government described Fokker’s remedial efforts as “a model to be followed by other corporations.” In light of this cooperation, the government negotiated a DPA with Fokker under which the company would continue its compliance and remediation efforts for another 18 months and pay a $21 million fine.

Pursuant to the DPA, the government filed a one-count criminal information against Fokker on June 5, 2014. Once federal charges are filed, the Speedy Trial Act normally requires that trial begin within seventy days. But the Act excuses any period of delay “during which prosecution is deferred by the attorney for the Government pursuant to written agreement with the defendant, with the approval of the court, for the purpose of allowing the defendant to demonstrate his good conduct.” It’s that “approval of the court” language that led to the dispute in this case.

After the charging document and DPA were filed, Judge Leon indicated he might withhold his approval. That would have the effect of torpedoing the DPA, because the Speedy Trial Act clock would keep running and the government would be forced either to take the case to trial or dismiss it long before the eighteen-month term of the DPA had expired. At a series of hearings Judge Leon said he thought the DPA was “too good a deal for the defendant.” He expressed concern about why no individual employees had been charged and why the government had not required Fokker to hire a corporate monitor.

After months of consideration, on February 5, 2015 Judge Leon denied the motion to exclude time under the Speedy Trial Act. He wrote it was not in the interest of justice to approve the DPA when Fokker had engaged in such egregious conduct and was being punished only “anemically.” He concluded the DPA was “grossly disproportionate to the gravity of Fokker Services’ conduct in a post-9/11 world” and “[did] not constitute an appropriate exercise of prosecutorial discretion.”

This marked the first time a district judge had denied a motion to exclude time under the Speedy Trial Act due to the judge’s disagreement with the terms of a DPA. Both the United States and Fokker appealed the judge’s order.

The D.C. Circuit’s Decision

The D.C. Circuit reversed Judge Leon’s ruling in an unanimous opinion written by Judge Sri Srinivasan (who reportedly was on the very short list for President Obama’s most recent Supreme Court nomination). The Court went out of its way to note it was not agreeing or disagreeing with Judge Leon’s views about the merits of the DPA, and that it had no occasion to do so. The point was that a judge has no business making such a judgment.

As the Court of Appeals noted, it has long been settled that criminal charging decisions – including what kind of charges to bring, when to dismiss charges, and whether to bring charges at all — are almost exclusively an Executive Branch prerogative. These decisions involve many considerations including the strength of the evidence, deterrence value of a prosecution, allocation of scarce resources, and law enforcement priorities. The Judiciary is ill equipped to make these judgments, and absent some kind of abuse or a constitutional violation a court will almost never second- guess such decisions.

Judge Leon, however, rejected the Fokker DPA because he thought the government had not been tough enough on Fokker and its employees. The Court of Appeals made it clear that was not the judge’s call. Whether he personally agreed with the terms of the agreement was irrelevant; Judge Leon should not have “assume[d] the role of Attorney General” by questioning the prosecutors’ decisions.

The approval of the court under the Speedy Trial Act, the Court of Appeals held, should simply be to ensure that the proposed DPA is actually for the legitimate purpose of allowing the defendant to “demonstrate his good conduct.” If it is, the judge’s inquiry is at an end. In questioning the terms of the deal and the government’s charging decisions, the Court of Appeals held, Judge Leon “significantly overstepped [his] authority.”

Consequences of the Court’s Decision

The D.C. Circuit’s decision is a welcome reaffirmation of the importance of separation of powers. Although judicial scrutiny of DPAs might have some facial appeal, it would actually raise a host of problems. Not only do judges simply lack the necessary information to make such decisions, but judicial intervention would have a number of other negative consequences.

When criticizing the lack of a corporate monitor in the Fokker DPA, Judge Leon remarked, “One can only imagine how a company with such a long track record of deceit and illegal behavior ever convinced the Department of Justice to agree to that!” But that’s precisely the point – the judge can only imagine. He doesn’t have the information necessary to make an informed judgment about the terms of the deal or why the government might have made that decision.

There may be many explanations for a DPA that looks lenient to the outside world. The alternative to a deal is a trial, where the government must prove its case beyond a reasonable doubt. Prosecutors may have information about possible difficulties in meeting that burden — such as problems with particular witnesses or the admissibility of certain evidence – unavailable to those not involved in the investigation. These considerations will always influence the government when deciding what kind of a deal it should make, whether it’s a plea agreement or a DPA, but likely will be unknown to the judge.

The government also must make judgments about the allocation of prosecution resources, law enforcement priorities, and deterring other wrongdoing while incentivizing cooperation. As the Court of Appeals noted, these are core functions of the Executive Branch, charged with faithfully executing the laws. A judge generally lacks much of the information necessary to make such judgments, and even if the judge had some relevant information, it is not the court’s place to intervene.

Apart from the structural separations of powers concerns, judicial review of the terms of DPAs would also have a number of practical negative consequences. Uncertainty is never a plus for parties trying to negotiate a resolution. Defendants would rightly be more cautious and reluctant to cooperate if they knew that whatever the government is offering them is not really the last word and that a judge might second guess whatever agreement they make.

Another likely, and undesirable, consequence of judicial scrutiny of the terms of DPAs would be a shift to the use of NPAs instead. Non-prosecution agreements do not require any charges to be filed with the court, and so do not require any court approval. Judge Leon himself noted that, “this Court would have no role here if the Government had chosen not to charge Fokker Services with any criminal conduct – even if that decision was the result of a non-prosecution agreement.”

Prosecutors can require as part of a NPA that defendants waive the statute of limitations, so they could still preserve the right to file charges later if the defendant failed to live up to the agreement. And the other terms of the agreement may be largely the same, allowing the prosecution to achieve the same goals as a DPA.

The primary difference is that a DPA generally is filed with the court and made public. A NPA could remain entirely private if the parties so chose. If DPAs were routinely second-guessed by trial judges, the logical response would be for prosecutors and defendants to shift to NPAs in order to avoid any such judicial interference. This could result in more secret deals and in less information being available to the public about any resolutions. The irony, therefore, would be that by purporting to subject the terms of these agreements to greater scrutiny, judicial review likely would instead drive such agreements underground and out of public view entirely.

There are legitimate concerns about the increasing use of DPAs. Companies face tremendous pressure to resolve criminal investigations short of a trial, which gives prosecutors enormous leverage. DPAs risk transforming the criminal justice system into a sort of regulatory, administrative regime run by prosecutors relieved of their burden of proving criminal conduct beyond a reasonable doubt.

But having judges play Monday morning quarterback concerning prosecutors’ charging decisions is not the answer. It’s fortunate the D.C. Circuit agreed.

Last week the U.S. Supreme Court declined to hear an appeal from former Illinois Governor Rod Blagojevich. Blagojevich (also known as “Blago”) was convicted on multiple counts of corruption in 2011 and was sentenced to fourteen years in prison.

While Blagojevich’s petition for certiorari was pending, the Supreme Court agreed to hear the corruption case of another former governor, Bob McDonnell of Virginia. McDonnell’s case is set to be argued on April 27 and should be decided by the end of this term.

When the Court agreed to take McDonnell’s case, some thought it might be a good omen for other public corruption defendants. Was the Court about to undertake a wholesale re-examination of corruption law in a way that would benefit Blagojevich, New Jersey Senator Bob Menendez, and other officials with pending cases? But the refusal to hear Blago’s appeal puts at least a temporary damper on any such hopes.

And how does Monty Python figure into all this? Read on.

Governor Blagojevich’s Case: Pay to Play

Blagojevich’s convictions resulted from a series of incidents in which he demanded cash or other things of value in exchange for various exercises of his power as governor. The most infamous example arose after Barack Obama was elected President. Obama had been a U.S. Senator from Illinois, and his election left a vacant Senate seat that Illinois law gave the governor the power to fill.

The FBI was already tapping Blago’s phones as part of an ongoing corruption probe, and it quickly became clear that the governor viewed his power to appoint Obama’s successor as a potential bonanza. In one memorable conversation, he was recorded telling his associate: “I’ve got this thing [the power to appoint a new Senator] and it’s f**king golden. I’m just not giving it up for f**cking nothing!”

Blagojevich believed that Obama’s preferred choice to take his seat was Valerie Jarrett. Accordingly, he tried to make a deal where he would appoint Jarrett in exchange for a spot in Obama’s cabinet or for a high-paying position in the private sector arranged by the President. When the Obama administration refused to make a deal, Blagojevich’s response was, “They’re not willing to give me anything except appreciation. F**k them.”

The governor then tried to make a deal with supporters of Rep. Jesse Jackson Jr. to appoint Jackson to the Senate seat in exchange for a $1.5 million “campaign contribution,” but he was arrested before this proposal had a chance to play itself out.

The evidence at trial also included other examples of a “pay to play” culture in the governor’s office. For example, when hospital lobbyists sought an increase in reimbursement rates for Medicaid patients, Blagojevich let it be known he would approve the increase only in exchange for a “campaign contribution” of $50,000. In another incident, when the state legislature approved a program that taxed casinos for the benefit of racetracks, Blagojevich had intermediaries inform a racetrack owner that the governor would not sign the bill until the owner fulfilled a $100,000 “campaign pledge.”

Although the defense characterized the money involved in these incidents as campaign contributions, the government maintained this was a sham and that the money was really for Blagojevich’s personal benefit. The governor was serving his second term and had already decided not to run for re-election, and so had no apparent reason to raise campaign funds.

In July 2015 the U.S. Court of Appeals for the Seventh Circuit, in a decision I discussed here, reversed five of Blagojevich’s convictions. The Court held that those counts rested in part on an improper legal theory: that the trading of political favors (such as trading one appointment for another), without more, could constitute extortion or bribery. However, that left thirteen counts of conviction intact, and those convictions formed the basis of Blagojevich’s petition to the Supreme Court.

More straightforward cases of bribery involve secret gifts to a politician that have nothing to do with campaign fundraising. In Bob McDonnell’s case, for example, such gifts included a Rolex watch, designer gowns for his wife, and paying for the caterer at his daughter’s wedding. Because the politician has no apparent legitimate reason to be accepting such gifts, a corrupt agreement may more readily be inferred when the politician then acts in favor of the donor.

Where campaign contributions are concerned, however, the analysis becomes trickier. Politicians do have a right to solicit campaign funds, and donors have a right to support politicians whose policies they favor. A campaign contribution may still be extortion or a bribe, but the evidence of a corrupt link will need to be very strong. It is not enough that a politician solicits a campaign contribution and later takes an action that the donor desired – that happens every day. To prove corruption, the government must establish that a particular contribution was given or demanded in exchange for an agreement to take a specific action in return – a clear deal, or quid pro quo.

Of course, it isn’t enough for a politician simply to claim that money he received was a legitimate campaign contribution. If that is the claim, then evidence concerning the nature of the donation and how it was handled becomes important. For example, one way to distinguish legitimate campaign contributions from corrupt gifts is to see whether the “donation” is within relevant legal limits and whether it shows up on required public campaign finance reports. If not, the circumstantial evidence is much stronger that the purported “campaign contribution” was actually a bribe.

The two leading Supreme Court cases involving bribery and campaign contributions are McCormick v. United States (1991) and Evans v. United States(1992). Both involved charges of Hobbs Act extortion under color of official right. And in both cases, the defendants claimed the money they received was actually a campaign contribution (even though, in both cases, they had failed to include the money on their campaign finance reports).

In McCormick the Court made it clear that, when it comes to campaign contributions, it’s not enough for the government to show simply that a donation was made with the expectation that the official would take an action that he in fact later did take. As long as we have privately financed campaigns, that is simply the nature of our politics. The Court held that Congress could not have intended to criminalize conduct that is essentially unavoidable in our political system. For a campaign contribution to be corrupt, therefore, it must be accepted “in return for an explicit promise or undertaking by the official to perform or not to perform an official act.”

But the following year in Evans, the Court seemed to soften this “explicit promise” standard. It held that extortion under color of official right requires only that the public official accept the thing of value knowing that it was given in exchange for a particular official act. There is no requirement that the official verbally demand the payment or “shake down” the payer.

In an important concurrence, Justice Kennedy noted this was essentially the quid pro quo requirement inherent in any bribery prosecution. There cannot just be a coincidence of timing between support and official action; the parties must make a specific deal. But, he noted, the parties “need not state the quid pro quo in express terms, for otherwise the law’s effect could be frustrated by knowing winks and nods.” It is enough if the quid pro quo can be implied from words or actions and the totality of the evidence surrounding the transaction.

The standard that emerges from McCormick and Evans, therefore, is that Hobbs Act extortion under color of official right in a campaign contribution case requires an explicit quid pro quo — but “explicit” does not always mean “express.” The key is whether there is a corrupt link between payment and official action, and that link may be proven by circumstantial evidence in the absence of an express verbal or written agreement.

Blago’s Supreme Court Petition and Implications for McDonnell

Blago’s principal argument to the Supreme Court was that it needs to clarify the McCormick/Evans standard and what it takes to prove a quid pro quo in a campaign contribution case. He claimed his conviction wrongfully failed to distinguish criminal conduct from a legitimate request for political support. He urged the Court to use his case to hold that, where campaign contributions are concerned, a higher degree of proof of an explicit corrupt agreement should be required. The Court apparently was not persuaded.

Blagojevich had made this same argument in the Seventh Circuit, which also rejected it. Judge Easterbrook’s opinion noted that Blago “assumes that extortion can violate the Hobbs Act only if a quid pro quo is demanded explicitly, but the statute does not have a magic-words requirement. Few politicians will say, on or off the record, ‘I will exchange official act X for payment Y.’”

And, in a reference that may have made Easterbrook my new favorite judge, he observed: “‘Nudge nudge, wink, wink, you know what I mean’ can amount to extortion under the Hobbs act, just as it can furnish the gist of a Monty Python sketch.”

(This Monty Python reference apparently impressed the Solicitor General’s office as well; they quoted it in their brief opposing Blagojevich’s petition for certiorari. I’m guessing this may be the first time Monty Python has made its way into Supreme Court advocacy – although I’d love to be proven wrong about that.)

In other words, as Justice Kennedy observed in Evans, the law cannot be defeated by knowing winks and nods. The jury in Blagojevich’s case was free to find the existence of the quid pro quo based on the overall facts and circumstances — including the fact that Blago’s characterization of the money as campaign contributions seemed implausible.

Does the Court’s refusal to hear Blagojevich’s case have any implications for McDonnell’s appeal? In one sense their arguments are similar: McDonnell, too, is claiming the government has wrongfully criminalized routine interactions between a politician and his supporters, and has urged the Court to clarify the line between corruption and “politics as usual.” If the Court were concerned about where that line is being drawn and thought it needed to re-examine public corruption law, one might have expected them to take Blago’s case as well.

But it’s probably a mistake to read too much into this decision where McDonnell is concerned. The facts of the two cases are very different, and the Seventh Circuit accurately characterized the evidence against Blagojevich as overwhelming. His blatant actions did not present a very sympathetic vehicle for probing the outer limits of federal corruption law.

Legally, McDonnell’s claim is different as well. He is not directly challenging the existence of a quid pro quo; rather, he is claiming that even if there was a deal, the quo promised by McDonnell is legally insufficient because it was not an “official act” within the meaning of federal corruption law. This was not an issue presented in the Blagojevich case; he clearly undertook official actions, the question was simply whether he acted pursuant to a corrupt deal.

It’s also possible this is just a question of timing. One of the government’s arguments opposing Blago’s petition was that the Supreme Court should not consider any of his claims until the government decides whether to retry him on the dismissed counts and he is resentenced. The prosecutors have already announced they will not retry him, and he is scheduled for resentencing on June 30. Once that happens, Blago’s lawyers have said they will petition the Supreme Court again to review his legal claims.

So it appears Blago will get one more bite at the Supreme Court apple. As for McDonnell’s fate, we should have the answer sometime in June. Rest assured, Sidebars will keep you posted. Say no more.

Update May 23, 2016: Today the Supreme Court rejected Blago’s petition to consider his appeal following his resentencing, so the Court will definitely not be hearing the case. His resentencing is now set for Aug. 6.